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Surakhani Oil boosts oil output by 15%

03 October 2008 09:17 (UTC +04:00)

Vugar Mustafayev â€“ APA-Economics. Surakhani Oil Operating Company, dealing with the development of Surakhani Field extracted 96 600 tons of oil during January-August, up 15.2% on a year earlier.
Oil production was 14 900 tons in August alone, said the company.
The production-sharing agreement (PSA) for the Surakhani field was signed by the State Oil Company of the Azerbaijani Republic (SOCAR) and Rafi Oil of the United Arab Emirates. SOCAR has a 25%-interest in the project and Rafi Oil holds 75 % in the PSA, signed on August 16. The property has an area of 13 sq km.
The contract, which is the 26th contract for developing oil fields in Azerbaijan to date, states that oil production at the field should rise 50% in two years. Rafi Oil finances SOCARâ€™s stake in the project until it doubles the current rate of extraction. SOCAR has the right to sever the contract if Rafi Oil does not fulfill its commitments. This is initially a 25-year PSA with the possibility of a five-year extension. Under the agreement, the associated gas will be delivered to Azerbaijanâ€™s national grid free of charge.
The field, which first went into production in 1904 and peaked in 1931 (4.187m tons), has 6.822m tons of oil left in it. A total of 2,503 wells have been drilled at Surakhany, which produced 115.6 mm tons of oil between 1904 and the start of 2005. A flat profit tax rate of 24 % will apply for the duration of the PSA. Rafi Oil plans to invest $ 400m in the field. This includes $ 100m during the initial stage to renovate existing infrastructure and the remainder on increasing production, implementing new technologies and other areas.
Rafi Oil estimates that Azerbaijan will earn $ 921m from the contract if oil prices average at $49 a barrel. Rafi Oil intends to increase oil production at the field from 95,100 tons in 2004 to 257,000 tons in 2014.